Are you drowning in monthly credit card debt payments and looking for a way to stop the harassing calls from creditors and debt collection agencies? Have you searched for “bill consolidation” or similar services? Bill consolidation is a program that often boasts its convenience and ability to save you money with lower interest. In reality, this program poses some serious dangers to consumers. Let’s take a look at what bill consolidation is all about and what it can’t do for you.

There are two main types of bill consolidation. One involves taking out a new loan with a debt consolidation agency in order to pay off debts with high interest rates. The other involves using an asset, usually a house, as collateral to pay off high-interest debt.

Using a debt consolidation company — The idea behind debt consolidation is that you can make one payment toward a loan that has a lower interest rate than the other debts in your name. For example, you may have a few credit cards with interest rates around 15%. Maybe you decide to contact a debt consolidation company in order to get help. The company tells you that you can have a lower monthly payment and a lower interest rate (let’s imagine the interest drops to 10%) through a new loan.

Doing it on your own — Sometimes, people try to “self-administer” a similar plan. For instance, people will open a 0% APR credit card and use this to pay off other debts.

In both cases, the consumer is in danger. Using a credit card is risky because the introductory rate will expire and the new rate could be very high. The rates also climb quickly if you miss a payment or pay late. Going with a debt consolidation agency is risky because you will actually pay back more in the long-run. While these companies advertise lower interest rates, they don’t tell you that this causes you to pay more money and to pay for a longer time. And usually, these agencies aren’t interested in helping you budget and save money along the way, so you can’t count on them for reliable and helpful credit counseling.

The debt consolidation agency will promise:

Lower payments

Lower interest

A way to get out of debt fast

You will actually experience the following:

Longer repayment

More money paid in the long-run

A lack of financial resources that can actually change or improve your spending habits

The other type of bill consolidation involves using an asset as collateral for your debt. A common asset used in this method is a house. Basically, a homeowner can liquidate equity in a house (in other words, they get cash for the amount they have already paid toward the mortgage) and use this to pay off high interest debt. The catch? The house will be refinanced, and the homeowner will lose any traction he or she has gained toward paying off the mortgage. For example, if you used $40,000 in home equity as bill consolidation to pay off high-interest credit card debt, you now have to make up that $40,000 in house payments, and you may have different terms when you refinance. If you run into further financial trouble in this scenario, you may lose your home.

ClearPoint Credit Counseling Solutions does not recommend these methods. Maybe in some cases they can work, but they put the consumer at risk. If you are struggling with debt already, then taking out a new loan probably isn’t a great option. And, you certainly don’t want to risk something valuable, like your house. What’s more important is to change your behavior so that you become financially healthy. What can help with this? Free credit counseling that teaches you how to manage your budget and can enroll you in safe programs to help you pay off your debt.